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Cuba opportunities, pitfalls dominate MDA trade summit

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Jose Oro speaks of opportunities in Cuba.

By JACK WEATHERLY

The Republic of Cuba was depicted as a land of opportunity for Mississippi businesses, though with a heightened sense of risk.

About 150 people attended the “Doing Business in Cuba Summit” on Thursday at the South Warehouse in Jackson.

Speakers at the Mississippi Development Authority event told of a country struggling to emerge from more than a half-century of the U.S. embargo and communist rule.

Those who attended to get information on the Cuban economy, and society, too, will get an opportunity in February to visit the island nation, one in the MDA’s continuing program of trade missions.

And the pitch was made that there is potentially a lot of money to be made to help the country of 11 million people 90 miles from Key West, Fla.

President Barack Obama reopened the U.S. Embassy in Havana and eased travel restrictions in that nation.

“We are calling on Cuba to unleash the potential of 11 million Cubans by ending unnecessary restrictions on their political, social, and economic activities,” Obama said in a speech on Dec. 17, 2014. “In that spirit, we should not allow U.S. sanctions to add to the burden of Cuban citizens that we seek to help.”

Several pieces of legislation pending in Congress would largely determine any change in trade relations with Cuba. One approach would allow only business with the fledgling private sector and another would lift the embargo entirely.

One speaker, Dr. Jose Oro, a Cuban-American and president of Oromax LLC, did not mince words about the trade restrictions. “I am totally against the embargo,” he said.

Generally speaking, U.S. exports that are allowed can only be paid in cash in advance or must be financed by third country financial institutions.

Fidel Castro, who is still living, turned over the reins of government to his brother, Raul, in 2008. In the wake of the 1959 revolution, the elder Castro seized U.S. property estimated to be worth $7 billion in today’s dollars.

The stand-off between the two countries hardened after the revolution when the U.S. and the Soviet Union had a showdown over nuclear missiles the USSR had placed on Cuban soil.

The lion’s share of the confiscated property was sugar factories, mines, oil refineries, and other business operations belonging to American corporations, among them the Coca-Cola Co., and Exxon, as ExxonMobil was called then, according to the Boston Globe.

The Cuban outlook on America has changed, beginning with the collapse of the Soviet Union in December 1991. The Soviets  had supported  their communist ally with very favorable trade deals.

Oro said Thursday: “We need $2.5 billion annually in foreign investment.”

The nation needs industrial investments of $40 billion between now and 2030, $9 million in new construction between 2017 and 2025, including 900,000 houses and another 500,000 that “need to be seriously repaired,” Oro said.

The housing need caught the attention of Bill Martin, director of the Franklin Furniture Institute at Mississippi State University.

Houses need furniture and “that seems like an opportunity,” Martin said. Mississippi is a leading furniture maker. Like others in attendance, Martin said the summit was a starting point to gather information.

Tourism, which has led the way in opening the door to Cuba, thus far is restricted to the “cultural” approach and person-to-person contact.

Yet a luxury Starwood hotel has been opened in Havana and Western Union is offering a way to get money to tourists.

Two of the speakers repeated the long-held position that the United States must return Guantanamo Naval Base, a 45-square-mile area on the southern end of the island leased by the U.S. since 1903, after the Spanish-American War.

It was initially used to refuel with coal U.S. warships. Since a much more recent war, with Afghanistan, the area is also a holding facility for unlawful combatants.

“It could easily be converted to tourism,” Oro said.

He acknowledged that some of the power plants on the island are run on refined heavy crude oil, which is pollutive, but added that the country is making strides in alternative energy sources such as wind, primarily from the Trade Winds, and solar, which benefits from 292 days of sunshine per year.

Wind power has “one of the biggest potentials for investment,” he said.

The country is in need of commercial fertilizer, he said, adding that most of it “trickles in” from North Africa and Russia and has high transportation costs. Thus fertilizer has an “enormous” potential for investment.

Of agriculture, he said, “The country needs to have food. Period.”

Likewise, the agriculture is in dire need of assets to take advantage of its crop potential. The work force is disincentivized because of the low pay, Oro said.

Thus, modernizing the industry would allow the country to realize its potential, he said.

Rice production in Cuba averages two tons per hectare (2.5 acres), he said, while rice growers in Mississippi and Louisiana produce seven tons.

Asked if tractor and fertilizer dealerships might provide a valuable element to the economy, Oro replied that they would, because “the distribution system in Cuba is very weak.”

Asked by an attendee about wages in the country, Ruben Ramos Arietta, head of the Economic and Trade Office for the Cuban Embassy in Washington, D.C., said the government sets them.

He offered no examples of what he meant.

Ramos did note progress that has been made in agreements with Sprint, AT&T and other telecoms.

Enrique Lopez, a consultant who lives in Miami, said that “if it communicates, it’s allowed.”

And Lopez said, anecdotally, the government does not monitor or restrict communications, unlike China.

Ramos acknowledged that the country has a problem with its currency, which could pose a problem for those contemplating investing in or building in Cuba.

Cuba has two currencies – the peso and the convertible peso. Both are legal on the island, though neither is exchangeable in foreign markets.

The convertible peso is pegged to the dollar and is worth 25 times as much as the peso. Most Cubans are paid in pesos, but nearly all consumer goods are priced in convertible pesos.

Yet with all the nation’s problems, Lopez said that “the train has left the station” and that neither Hillary Clinton nor Donald Trump, vying to lead the American government, can stop it.

About Jack Weatherly

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